Law firms aren’t what they used to be, so do ethical standards that were devised for a more traditional industry need amending, too? It’s a challenge the legal industry faces in the years ahead, and one which the American Bar Association has already taken steps to answer.
Andrew M. Perlman, dean and professor of law at Suffolk University Law School, recently spoke at a ABA/Thomson Reuters General Counsel speakers event. Perlman, who was the chief reporter of the Commission on Ethics 20/20 and vice chair of the ABA Commission on the Future of Legal Services and is now the chair of the ABA Center for Innovation, noted that it wasn’t that long ago when the average law practice “occurred in a single jurisdiction. Lawyers handled anything that came through the door. They didn’t have anybody to outsource it to,” he said. “Many years ago, if entities needed legal work, there weren’t general counsel. In fact, the ABA took the position that general counsel were unethical: Many believed that being a client’s in-house counsel was antithetical to the basic principles of legal ethics.”
Much has changed today, as the growth of technology and globalization has permanently altered the legal landscape. “Today, there’s an entirely new vocabulary, new knowledge, new skills, a new way of doing things,” Perlman said. It also means new regulatory issues for lawyers to address, especially if their work crosses international lines.
“We’re already seeing a range of new players at the table. I think that these other providers should exist — they’re opening up the market and making it possible for clients to draw on a wider range of professionals.”
Perlman broke down major regulatory issues into two broad categories — “micro” and “macro” issues. “Micro” issues include everyday practice questions, such as the extent to which lawyers can practice across international borders. For example, if there’s a lawyer in France who wants to come to the U.S. to assist a colleague on a particular transaction, what are the ethical considerations. “To what extent can a French lawyer, who might have to give up his or her license to practice in order to work in an in-house capacity, move to the United States [and] practice as an in-house counsel in New York?”
The ABA, via a recent change to Rule 5.5 of its Model Rules of Professional Conduct, has developed a model rule on temporary practice by foreign lawyers to facilitate this type of work. A lawyer in the above example, at least in a state that’s adopted the Model Rules, would thus be permitted to relocate within the United States. “Then there are conflicts of law, or choice of law issues,” Perlman said. “Those of you who work for companies with robust international businesses probably see this come up with some regularity. That is: conflicts-of-interest rules are quite different in other countries than they are in the United States. How do you navigate them? How do your law firms navigate them?”
The Commission on Ethics 20/20 proposed a change to a comment to a rule of professional conduct, which was adopted by the ABA’s House of Delegates, that would “make it a little easier to enter into agreements with outside counsel that would specify the jurisdiction that would govern a conflict-of-interest situation.”
“Conflicts-of-interest rules are quite different in other countries than they are in the United States. How do you navigate them? How do your law firms navigate them?”
Then there are broader “macro” ethical issues, many of which center on the key question of “who should be permitted to deliver legal services. It’s not just lawyers anymore.” Not too long ago, legal services were delivered by those who passed the bar exam, end of story. Now that’s changing. “We’ve seen the emergence of other kinds of legal services providers,” Perlman said. These include consumer-focused legal document preparers and court-authorized and regulated legal services providers. The Washington State Supreme Court “recently authorized limited-license legal technicians to practice law for all intents and purposes, in very limited types of cases directed towards consumers, but without all of the regular requirements of going to law school for three years and passing the bar exam,” Perlman said. “It’s a very different kind of legal professional.”
Shifts in regulatory thinking should reflect the new facts on the ground, and in some ways, these changes are already here, he said. “We’re already seeing a range of new players at the table,” he added. “I think that these other providers should exist — they’re opening up the market and making it possible for clients to draw on a wider range of professionals.”
So far, states have responded to these new types of legal providers in a binary way, “either going after them and alleging unauthorized practice of law, or doing nothing at all and it’s a laissez-faire approach.” Perlman argued for a third way, in which “liberalization does not equal deregulation. We can have modest regulations to guide the delivery of legal services in a new economy.”
The ABA Commission on the Future of Legal Services recommended “that the touchstone, when we think about regulation in the 21st century legal marketplace, has to be a set of principles that we can follow,” he said. After a recommendation from the Commission, the ABA last year created a set of Model Regulatory Objectives for the Provision of Legal Services. “The regulatory objectives recognize that the delivery of legal services includes a range of new providers and that we need to acknowledge this reality,” Perlman explained. “Number one on the list is protecting the public. The goal of regulation should not be the protection of lawyers.”
By following these principles, the hope is that as new players appear, regulators can consider “what, if any, regulations might usefully exist.” And “the final regulatory issue, which has been a third rail in many circles, is the question of alternative business structures,” he said. Essentially: can lawyers and these other types of practitioners be allowed to partner together and share fees?
“Around the world, that’s happening. It’s not happening in the United States, except to a very limited extent in Washington State and Washington D.C., because Rule 5.4 of the Rules of Professional Conduct does not permit it.” Yet like many once-standard rules in the U.S. legal industry, that situation could change, and in the near future.
ABA Immediate Past President Linda Klein agreed with Perlman’s message at the event. “As technology and globalization change the practice of law, Dean Perlman’s comments highlight the importance of an ongoing dialogue in our profession about how we can continue to protect the public with ethics rules, regardless of how the services are being provided,” Klein said.